Another Fraud Exposed. The Potomac Refining Company, a concern which has been pecking around an old abandoned limestone quarry on the Maryland side of the Potomac river between Shepherdstown and Harper’s Ferry, has been proclaimed a fraud and its officers last week were indicted in the United States Court in Baltimore for improper use of the mails. Those were Michael P. Kehoe, president; indicted Dr. Harry C. Hess, treasurer; Louis Fe Plack,vice-president; Charles B.Sanger, secretary and sales manager; Edward R. Cooper, general manager; Robert W. Mobray, general counsel; A. B. Young, stock salesman–all of whom were arrested and held to bail, except Young, who is said to be in Europe. The property involved, some 200 acres, cost a few years ago $4,000.
Probably nothing more rosy in the way of an investment was ever held out as a bait to a gullible public. The promoters of the company got out the most beautiful literature, and their circulars were marvels of fine printing and artistic description. They showed–on paper– deposits of millions of tons of manganese, limestone, marble, iron ore, ochre, fireclay, tripoli, hematite, dolomite, and other valuable minerals, which Mother Nature had apparently put in one conveniently arranged mountain to await discovery by the Potomac Refining Company. They presented figures showing that they had in sight minerals to the value of $103,155,000 on which the profits were estimated at $65,941,500. “Sixty dollars a second” was the net revenue they were digging out of that once-despised hillside.
The scheme, of course, was to sell stock to confiding investors. Alluring circulars were sent all over the United States, and 900 per cent profit was promised. The promoters, it is alleged, actually sold stocks and bonds to the amount of $160,000, and were hoping for a rich haul by getting rid of a total of $1,500,000 in stock.
The attention of the postal authorities was directed to the operations of the company by tempting advertisements in the magazines and by some of the literature forwarded to the department by officials of the Shepherdstown postoffice, through which it passed. Investigation showed that it was a very suspicious concern. The Register had been requested to publish, as a local newspaper, articles concerning the company, but we didn’t have sufficient faith in it to do so. One incident that was fishy was the ‘borrowing” of a number of workmen from the limestone quarries at Bakerton to help make a good picture. For the past year or two a small number of workmen were employed at the Refining Company’s “mines,” and they dug from the hillside a lot of rock and laid a few rods of rails for trucks and a dinky engine. In one of the circulars sent out was a picture of the workmen at the plant. They showed up in imposing members, but close inspection showed a considerable proportion of the Bakerton hands, who had been induced to pose in the photograph.
Two experts from the Geological Survey were sent by the government a short time ago to inspect the property and as to the value of the minerals. They reported that the manganese in sight was worth about $1,500. The company’s put it at $25,000,000!
